9. The answers constantly use the phrase "fake profits.' This is a legalistic and psychological ploy to try to make readers forget that to protect people against being harmed by theft by crooks like Madoff was a specific purpose of SIPA. In this regard, of course, the thieves will provide false statements showing fake profits -- how else would they prevent victims from learning what is happening? It is thus inherent in Congress' explicitly expressed desire for SIPA to protect against theft that there will be phony statements showing false profits (as occurred, by the way, in Bayou and Visconti and, I would imagine, in New Times).
The continuous use of "fake profits" is also a psychological ploy to make people forget that Picard is taking money from the now-poor to give to the rich. The now-poor are being required to give up what SIPC's answers continuously call their "fake profits," so it supposedly is alright to take money from them to give to hedge funds and banks.
10. Pp. 11-12: The answers make claims about assignments, but we've never seen one and can't judge the veracity of what the answers say.
11. P. 12: Their answers to the question on disbursements state the "Number of Disbursements in Excess of Deposits." (Emphasis supplied.) But the question did not ask for the number of disbursements in excess of deposits (whatever that means), but rather for "the number of disbursements." Why have they answered a different question than what was asked? What is their game here? Am I missing something?
12. On p. 11 they provide their justification -- in reality, their excuse -- for not crediting customers with short term earnings under CICO. Their excuse is pure balderdash, and, were it true, no fund or bank would have to credit customers with interest on funds the institution has "parked" in short term instruments, since it all would be considered the institution's money, not the money of customers. I have discussed this matter in a lengthy footnote to a brief, as follows:
The only thing SIPC or the Trustee has publicly said about all of this to date is that Mr. Harbeck told NIAP that the short term earnings were not credited to victims because they are customer property. This is a transparently disingenuous answer which seeks to avoid the issue. The question is not whether such earnings, under SIPA, are customer property after the Madoff bankruptcy. For all Madoff property became customer property under SIPA after the bankruptcy, and under Harbeck's transparently disingenuous, so-called logic, customer accounts should have been credited with nothing for SIPA purposes after the bankruptcy. The question, is not what is or is not customer property, but is, rather, how much should victims' accounts have been credited with under SIPA after the bankruptcy.
This question leads in turn to the question of why did SIPC and the Trustee not credit the victims' accounts with the "cash-in" accruing from interest on short term instruments -- interest which is credited to customers who hold earnings-bearing accounts by every financial institution in the country. Is the answer to the last question that SIPC and the Trustee did not credit interest to the victims because they knew that SIPC did not have the money to pay all the advances which would be required even under CICO if the interest was credited to victims and thereby gave many or most victims a positive net equity? (The interest, whose total amount neither SIPC nor the Trustee has disclosed, could amount to many hundreds of millions or even billions of dollars over the twenty or so years during which the fraud is known to have been ongoing, and thus could easily have made the difference between a positive and a negative net equity under CICO for hundreds or thousands of people.) Is part of the answer to the question that SIPC and the Trustee knew the failure to credit victims with the interest, thereby causing them to have a negative net equity under CICO, would fly in the face of Congressional intent to protect victims, especially small ones, but SIPC and the Trustee decided to do this anyway because otherwise SIPC did not have enough money to pay advances to victims? Is the answer that SIPC and the Trustee simply made a mistake and then refused to own up to it when victims learned and pointed out that there had been short term interest earnings which should have been credited to them?
Whatever the answers to these questions, it is obvious -- obvious -- that the answers (i) can make all the difference in this case as to what customers' net equity should be even under CICO -- can be material and controlling on that score, (ii) can make all the difference on whether victims are subject to clawbacks since properly crediting customers with the interest earned on their accounts -- interest which is defacto cash-in for customers -- may cause customers not to have taken out more than they put in, and (iii) should be subject to discovery, including discovery via deposition of the two people who likely best know the answers, Messrs. Picard and Harbeck.
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